Defending champion Van Pelt double-bogeyed the last to sign for a nine-under-par 62 and sit at the top of the leaderboard on 16-under 197 alongside overnight front-runner Robert Garrigus (69), with Woods (69) a further five shots back in joint 10th.
Heavy rain in Malaysia led to a second day of preferred lies at the soggy Mines Golf Course, leaving the course exposed to supreme scoring with only five of the 48 players in the field going over par in their third round.
Woods had raced to the turn in 30 after five birdies and four pars but his round unravelled on the back nine as he dropped five shots to offset two more birdies on another stifling day in Kuala Lumpur.
"I made a couple of bad decisions, bad swings on top of that, just all-in-all made too many mistakes and on a golf course that is playing this benign, you cant afford to do that," Woods said.
"I'm going to have to shoot a low one tomorrow, something similar like Bo did today, but probably being this far back, I'm going to need some help, a great round tomorrow might not win that's the only problem."
Starting the day five behind Garrigus, Woods roared out of the blocks, holing a 12 foot birdie putt from the fringe on the short par-four first as he finally found some form with the short stick after two days of struggles.
Four further birdies came by the eighth as he raced to 14-under and held the lead on his own in the US and Asian Tour co-sanctioned event, which will become an official tournament on the American circuit next year.
However, the rest of the field were also taking advantage of the ideal conditions and Woods was joined at the top by four others at one stage, including Van Pelt, who had started the day seven back but turned in 29 to make up the gap.
Van Pelt added further birdies at 10, 11 and 12 to make it five in a row as he moved two ahead of Woods and set up the chance of joining the likes of David Duval, Chip Beck and Stuart Appleby in the 59-club.
While Van Pelt charged, Woods was enduring a difficult start to the back nine as he lost his second shot to the par-five 11th way right, the ball bouncing off the cart path and finishing up with an awkward lie on a bank.
Standing on the path, Woods chipped down to 20 foot but missed his birdie effort and he also failed to get up-and-down from the edge of the green on the next hole, missing a slippery downhill four-footer for par to drop his first shot of the day.
After rolling in a straight 15 foot effort for birdie on the par-four 13th, Woods' approach to the par-three 14th came up short and rolled down the bank into the lake, leading to a double bogey after a duffed chip.
Woods rattled in a 20 footer for birdie on 15 but he dropped another at the par-three 16th after failing to get up and down from the bunker and then three-putted 17 for bogey after missing a short putt.
Van Pelt had few such worries on 16 as he rolled in his 10th birdie putt of the day on the hole, before narrowly missing a lengthy eagle putt at 17, when his curling effort across the green at the par-five just brushed the edge of the hole.
Needing a birdie at the last for the magical but unofficial 59 due to the preferred lie rule, Van Pelt drove through the fairway to the left of the tee before plonking his approach to the par-four in the bunker right of the green.
A poor, escape and heavy chip shot left a six-foot bogey effort which lipped out to end his sparkling round in disappointing fashion.
"Obviously disappointing to finish with a double, but I look back on the 17-and-a-half holes I played well, and you know, hopefully that will carry over into tomorrow - not the last half," Van Pelt said.
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